8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

_______________________

Date of Report
(Date of earliest event reported)	February 5, 2020

BADGER METER INC

(Exact name of registrant as specified in its charter)

Wisconsin	001-06706	39-0143280
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4545 W. Brown Deer Rd., Milwaukee, Wisconsin 53223

(Address of principal executive offices, including zip code)

(414) 355-0400

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

_______________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	BMI	New York Stock Exchange LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02
Results of Operations and Financial Condition .

On February 5, 2020, Badger Meter, Inc. (the “Company”) issued a press release announcing its quarterly financial results for the 2019 fourth quarter ended December 31, 2019.

A copy of the press release issued by the Company announcing the foregoing is furnished herewith as Exhibit 99.1.

Item 9.01
Financial Statements and Exhibits .

(a)	Not applicable.
(b)	Not applicable.
(c)	Not applicable.
(d)	Exhibits .   The exhibit furnished herewith is as listed in the accompanying Exhibit Index.

 

EXHIBIT INDEX

Exhibit No.	Description
(99.1)	Badger Meter, Inc. Press Release, dated February 5, 2020.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BADGER METER, INC.
Date: February 5, 2020	By:	/s/ Robert A. Wrocklage
		Robert A. Wrocklage
		Senior Vice President – Chief Financial Officer

EX-99.1

Exhibit 99.1

Badger Meter Reports Fourth Quarter and Full Year 2019 Results

MILWAUKEE--(BUSINESS WIRE)--February 5, 2020--Badger Meter, Inc. (NYSE: BMI) today reported results for the fourth quarter ended December 31, 2019.

Fourth Quarter 2019 Highlights

• Net sales for the fourth quarter of 2019 were $107.6 million, an increase of 3% compared to $104.4 million in the comparable prior year quarter; municipal water sales increased 8% year-over-year.
• GAAP net earnings and diluted earnings per share (EPS) were $12.3 million and $0.42, respectively, compared to $11.2 million and $0.39 in the comparable prior year period.
• Excluding the impact of executive retirement charges in 2018, EPS of $0.42 in the fourth quarter of 2019 increased 5% from adjusted EPS of $0.40 in the fourth quarter of 2018. (See 2018 adjusted results in the attached GAAP to Non-GAAP reconciliation).

Full Year 2019 Highlights

• Net sales in 2019 totaled $424.6 million compared to $433.7 million in the comparable prior year. Domestic municipal water sales increased 1% on a full year basis.
• Gross profit margin for the year of 38.5%, an increase of 110 basis points year-over-year.
• GAAP net earnings and EPS were $47.2 million and $1.61, respectively, compared to $27.8 million and $0.95 in the comparable prior year period.
• Excluding the impact of pension termination settlement and executive retirement charges in the prior year, EPS of $1.61 increased 5% from the prior year’s adjusted EPS of $1.54. (See 2018 adjusted results in the attached GAAP to Non-GAAP reconciliation).
• Record cash provided by operations of $80.7 million.

Fourth Quarter Operating Results

“We are very pleased with the strong growth in our domestic municipal water revenue and continued interest in our newer technology products. Flow instrumentation demand was tepid, as global industrial activity was soft in the quarter. Our operating margins improved year-over-year and cash flow remains strong. Overall, it was a solid finish to the year and I want to express my appreciation to all of our Badger Meter colleagues across the globe for the progress made this year,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer of Badger Meter.

Municipal water sales increased 8% year-over-year with robust demand for the new three and four-inch ultrasonic meters incorporating our D-Flow technology, as well as ORION^® Cellular LTE-M radio installations including those at key customer projects announced earlier in the year. Customer feedback on implementation has been very positive. Sales of flow instrumentation products declined 11% year-over-year across the array of industrial end markets served globally due to sluggish market demand.

Operating margins were 15.2% in the fourth quarter of 2019 compared to an adjusted 14.6% in the comparable prior year period. Gross profit margins were strong at 38.2%, reflective of positive product sales mix, most notably commercial ultrasonic meters and cellular radio solutions.

Selling, engineering and administration (“SEA”) expenses in the fourth quarter of 2019 totaled $24.8 million compared to an adjusted $24.9 million in the prior year. Adjusted SEA leverage improved 80 basis points to 23.0% from 23.8% in the prior year comparable quarter. The income tax rate of 24.3% was modestly higher than the prior year’s adjusted 23.0%.

Full Year Recap and Outlook

Bockhorst continued, “As I reflect on our 2019 results and look ahead to 2020, a number of accomplishments stand out. We launched multiple, successful new products in 2019. Despite the innovation pause that it created mid-year, we grew domestic municipal sales for the full year and exited the year with momentum. We made significant progress improving gross margins, consistently delivering in the upper half of our normalized range. Our SEA was well managed, and we launched a number of processes to strengthen our working capital management, leading to outstanding cash flow and earnings conversion for the year.”

“As we move into 2020, municipal water spending remains healthy and we continue to experience favorable feedback from installation and pilot testing of our leading technologies. We have several new products that will be launching, including the next generation of our residential ultrasonic meters and our flow restriction meter. While we expect a modest potential headwind from higher brass costs, our profit margins should continue to benefit from positive product and software sales mix and continuous improvement activities across all aspects of our operations. We have extensive available capital to deploy on internal research and development and disciplined, strategic acquisitions with an active funnel of opportunities.” Bockhorst concluded, “As we embark on our 115^th year in business, we believe that our comprehensive portfolio of smart water solutions and commitment to innovation will continue to solve customer challenges and preserve the world’s most precious resource.”

Conference Call and Webcast Information

Badger Meter management will hold a conference call to discuss the company’s fourth quarter 2019 results today, Wednesday, February 5, 2020 at 10:00 AM CT / 11:00 AM ET. The call and related presentation can be accessed via webcast through the Investor section of our website or by dialing 1-877-823-9761 (US) or 1-647-689-5327 (Intl) and entering the passcode 4995411. The webcast will be archived on the company’s website until its next earnings release.

Safe Harbor Statement

Certain statements contained in this news release, as well as other information provided from time to time by Badger Meter (the “company”) or its employees, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those statements. The company’s results are also subject to general economic conditions, variation in demand from customers, continued market acceptance of new products, the successful integration of acquisitions, competitive pricing and operating efficiencies, supply chain risk, material and labor cost increases, tax reform and foreign currency risk. See the company’s Form 10-K filed with the SEC for further information regarding risk factors. Badger Meter disclaims any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.

About Badger Meter

Badger Meter is an innovator in flow measurement, control and communications solutions, serving water utilities, municipalities, and commercial and industrial customers worldwide. The company’s products measure water, oil, chemicals, and other fluids, and are known for accuracy, long-lasting durability and for providing valuable and timely measurement data. For more information, visit badgermeter.com.

BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except share and earnings per share data)
		Three Months Ended					Twelve Months Ended
		December 31,			December 31,		December 31,		December 31,
			2019			2018		2019		2018
		(Unaudited)			(Unaudited)		(Unaudited)
Net sales		$	107,556		$	104,413	$	424,625	$	433,732
Cost of sales			66,431			64,262		261,097		271,383
Gross margin			41,125			40,151		163,528		162,349
Selling, engineering and administration			24,782			25,341		101,380		105,480
Operating earnings			16,343			14,810		62,148		56,869
Interest (income) expense, net			(27	)		163		253		1,157
Other pension and postretirement costs			165			61		288		19,860
Earnings before income taxes			16,205			14,586		61,607		35,852
Provision for income taxes			3,931			3,347		14,430		8,062
Net earnings		$	12,274		$	11,239	$	47,177	$	27,790
Earnings per share:
	Basic	$	0.42		$	0.39	$	1.63	$	0.96
	Diluted	$	0.42		$	0.39	$	1.61	$	0.95
Shares used in computation of earnings per share:
	Basic		29,039,296			28,989,523		29,028,204		28,993,074
	Diluted		29,227,804			29,178,969		29,220,165		29,189,257

BADGER METER, INC.
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES TO GAAP PERFORMANCE MEASURES
(in thousands, except share and earnings per share data)
	Three Months Ended				Twelve Months Ended
	December 31,		December 31,		December 31,		December 31,
	2019		2018		2019		2018
	(Unaudited)		(Unaudited)		(Unaudited)
Selling, engineering and administration (GAAP measure)	$	24,782	$	25,341	$	101,380	$	105,480
Executive retirement charges		-		477		-		2,575
Adjusted selling, engineering and administration	$	24,782	$	24,864	$	101,380	$	102,905
Operating earnings (GAAP measure)	$	16,343	$	14,810	$	62,148	$	56,869
Executive retirement charges		-		477		-		2,575
Adjusted operating earnings	$	16,343	$	15,287	$	62,148	$	59,444
Net earnings (GAAP measure)	$	12,274	$	11,239	$	47,177	$	27,790
Executive retirement charges, net of tax		-		359		-		2,357
Pension termination settlement charge, net of tax		-		-		-		14,786
Adjusted net earnings	$	12,274	$	11,598	$	47,177	$	44,933
Diluted earnings per share (GAAP measure)	$	0.42	$	0.39	$	1.61	$	0.95
Executive retirement charges, net of tax		-		0.01		-		0.09
Pension termination settlement charge, net of tax		-		-		-		0.50
Adjusted diluted earnings per share	$	0.42	$	0.40	$	1.61	$	1.54

BADGER METER, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
Assets	December 31,		December 31,
	2019		2018
	(Unaudited)
Cash	$	48,871	$	13,086
Receivables		61,365		66,300
Inventories		81,948		80,804
Other current assets		7,910		4,469
Total current assets		200,094		164,659
Net property, plant and equipment		85,761		90,321
Intangible assets, at cost less accumulated amortization		48,163		55,418
Other long-term assets		16,617		11,035
Goodwill		71,258		71,258
Total assets	$	421,893	$	392,691
Liabilities and Shareholders' Equity
Short-term debt	$	4,480	$	18,060
Payables		31,523		22,469
Accrued compensation and employee benefits		12,754		13,768
Other current liabilities		8,490		5,718
Total current liabilities		57,247		60,015
Deferred income taxes		876		3,332
Long-term employee benefits and other		32,702		25,841
Shareholders' equity		331,068		303,503
Total liabilities and shareholders' equity	$	421,893	$	392,691

BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
	Three Months Ended						Twelve Months Ended
	December 31,			December 31,			December 31,			December 31,
	2019			2018			2019			2018
	(Unaudited)			(Unaudited)			(Unaudited)
Operating activities:
Net earnings	$	12,274		$	11,239		$	47,177		$	27,790
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation		2,881			2,558			11,569			11,354
Amortization		3,254			3,286			12,577			12,961
Deferred income taxes		(1,542	)		(5,401	)		(1,524	)		(5,269	)
Noncurrent employee benefits		110			203			(40	)		464
Pension termination settlement charges		-			-			-			19,900
Contribution to pension plan		-			-			-			(2,860	)
Stock-based compensation expense		332			800			1,214			4,174
Changes in:
Receivables		896			3,463			5,451			(7,999	)
Inventories		3,039			3,450			(1,220	)		4,859
Payables		757			(7,400	)		11,642			(9,868	)
Prepaid expenses and other current assets		(1,926	)		511			(7,732	)		(5,062	)
Other current liabilities		(500	)		7,710			1,600			9,906
Total adjustments		7,301			9,180			33,537			32,560
Net cash provided by operations		19,575			20,419			80,714			60,350
Investing activities:
Property, plant and equipment expenditures		(1,907	)		(1,424	)		(7,496	)		(8,643	)
Acquisitions, net of cash acquired and future payments		-			-			-			(8,048	)
Net cash used for investing activities		(1,907	)		(1,424	)		(7,496	)		(16,691	)
Financing activities:
Net decrease short-term debt		-			(12,579	)		(13,500	)		(21,012	)
Payment of contingent acquisition consideration		(905	)		-			(2,555	)		(2,034	)
Dividends paid		(4,943	)		(4,370	)		(18,595	)		(16,265	)
Proceeds from exercise of stock options		998			510			1,961			1,443
Repurchase of treasury stock		(1,848	)		(344	)		(5,207	)		(4,795	)
Issuance of treasury stock		44			42			187			523
Net cash used for financing activities		(6,654	)		(16,741	)		(37,709	)		(42,140	)
Effect of foreign exchange rates on cash		129			203			276			403
Increase in cash		11,143			2,457			35,785			1,922
Cash - beginning of period		37,728			10,629			13,086			11,164
Cash - end of period	$	48,871		$	13,086		$	48,871		$	13,086

Contacts

Karen Bauer at (414) 371-7276
kbauer@badgermeter.com

XML

Document and Entity Information	Feb. 05, 2020
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 05, 2020
Entity Registrant Name	BADGER METER INC
Entity Incorporation, State or Country Code	WI
Entity File Number	001-06706
Entity Tax Identification Number	39-0143280
Entity Address, Address Line One	4545 W. Brown Deer Rd.
Entity Address, City or Town	Milwaukee
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	53223
City Area Code	414
Local Phone Number	355-0400
Entity Information, Former Legal or Registered Name	Not Applicable
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000009092
Title of 12(b) Security	Common Stock
Trading Symbol	BMI
Security Exchange Name	NYSE